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Mattel and Hasbro Both Surprised the Markets for Q2

In this segment of the Motley Fool Money radio show, host Chris Hill and Million Dollar Portfolio's Jason Moser sort through the toy bin, and break down why two of the big names are going in such different directions in terms of their businesses, but going in the same one -- down sharply -- when it comes to stock price. Hasbro(NASDAQ: HAS) is winning precisely in the places Mattel(NASDAQ: MAT) is losing. But its headwinds are coming internationally.

A full transcript follows the video.

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Chris Hill: Mattel's second quarter loss was bigger than Wall Street was expecting, well Hasbro'ssecond quarter profit came in higher than expected. Jason, Hasbro's quarter was better by pretty much every measure, which makes me wonder, why are both of these stocks down around 10% this week?

Jason Moser: Yeah, very similar reaction from the market on both companies. But this is really a tale of two toy makers. We talked about this for a while. Mattel's shortcomings have really converted into Hasbro's market share gains, more or less. On the Hasbro side, there's sell-offs where you have to look at the business and say, "Is there a problem here that we need to know about?" In Hasbro's case, there really isn't. This was a very good quarter by pretty much every measure. You can see in the call that management is a little bit reserved when it came to a couple markets in particular. The U.K. and Brazil, recognizing some macro headwinds there that are beyond their control. And international is important for Hasbro. It's almost half of their revenue. Somewhere around a third of their operating profit. Brazil is a very big part of that international segment. It matters. But there are plenty of catalysts on the horizon for them. You have this Force Friday coming up, you have more Frozen stuff coming in the winter. There's more catalysts than concerns when it comes to Hasbro.

Now, Mattel, the concerns that we had last quarter are still there. It's very hard to get worked up for this business, because they just aren't doing the same job levering themselves up to really successful IP. What that is resulting in is a top line that's challenged, margins are getting killed, and the dividend is even getting cut on top. Investors are realizing more and more that if you're going to get exposure to the space, go ahead and get it with a company that is winning and winning for a reason, and shows a lot of reasons to keep on winning, and that's clearly Hasbro.